Jan 1 Sold merchandise to Jane for $5000, 2/10, n/30

Mar 15 Received $2500 from Jane on account

July 6 Write off as uncollectible the balance on Jane account (Hint: do not use Bad Debt Expense, this is where you DEBIT Allowance for Doubtful Accounts and CREDIT ACCOUNTS REC.)

Aug 31 Receive $1000 from Jane (there would be two entries here. The first one will put the receivable back -- $1000 of the receivable. To add to the receivable, you do the opposite of what you did on July 6, only with $1000. DEBIT: Accounts Receivable CREDIT: Allowance for Doubtful Accounts

Example problem:

Feb 1 Jane Co sold merchandise on account to Bill Co for $5000, n/30

Mar 15 Bill Co gave Jane Co a 5% promissory note to settle this account.

If Net sales are $5 million and accounts receivable are $1 million at beginning of year and $1.5 million at the end of the year, what is the receivable turnover?

What is the average collection period for accounts receivable (in days)